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Lawmakers Lash Wall Street Execs at Hearings

Lawmakers Lash Wall Street Execs at Hearings

Code Pink protesters, including co-founder Medea Benjamin (left) stand behind former AIG CEO Martin Sullivan after he testified at the U.S. House Oversight and Government Reform Committee hearing on Capitol Hill, Tuesday. (Larry Downing / Reuters)

WASHINGTON - If Wall Street executives are hoping to
forestall a wave of new regulations of the finance industry next year,
they'd better hope the public isn't watching the hearings in Congress
this week.

The top executives of Lehman Bros., which has filed for bankruptcy,
and AIG, which has been propped up by an $85 billion federal bailout,
are taking a public whipping for their role in the financial crisis -
and they're quickly becoming the poster children for greed and
mismanagement on Wall Street.

The hearings, which will last through the month, appeared to be part
of a two-pronged strategy by House Speaker Nancy Pelosi of San
Francisco and top Democrats: They hope to focus voters' anger over the
economy on a lack of oversight of Wall Street, a tactic that's paying
dividends for the party's presidential nominee, Barack Obama. The
hearings also could prime the pump for passing broad new regulations
next year.

Lawmakers revealed Tuesday that just days after the Sept. 16 federal
bailout of AIG, executives and salespeople at the firm met at the
lavish St. Regis Monarch Beach resort in Dana Point (Orange County),
where the rooms can cost $1,000 a night. According to the invoices, the
company spent $200,000 on rooms, more than $150,000 on meals, $23,000
in spa charges and $7,000 on golf.

"Average Americans are suffering economically, they are losing their
jobs, their homes, and their health insurance, yet less than one week
after the taxpayers rescued AIG, company executives could be found
wining and dining at one of the most exclusive resorts in the nation,"
said House Oversight and Government Reform Committee Chairman Henry
Waxman, D-Los Angeles.

Bonuses amid loss

The former CEO of AIG, Martin Sullivan, who departed in June, also
was raked over the coals at a hearing Tuesday for urging the company's
board in March to approve cash bonuses for 70 top executives, even
though the firm posted a $5 billion loss in the final quarter of 2007.
The board agreed, and Sullivan's own bonus was worth $5 million.

The revelations came a day after lawmakers grilled former Lehman
Bros. CEO Richard Fuld on why in the days leading up to the firm's
spectacular collapse - while Lehman was negotiating for its own federal
rescue - the company was funneling $20 million in "golden handshakes"
to three departing executives.

Republicans also are seeking political traction to get out of the
financial crisis. House GOP leaders have blasted Democrats for calling
hearings to scrutinize Lehman Bros., AIG, hedge funds, the credit
rating agencies and even Bush administration regulators - but leaving
out mortgage giants Fannie Mae and Freddie Mac, whose questionable
lending practices forced a government rescue last month.

Republicans have long criticized the quasi-governmental mortgage
giants, and they hope to fix blame on some of the well-known Democrats
who led them, such as former Fannie Mae chairman and CEO Franklin
Raines, a top Clinton administration budget official.

"We need to keep the toxic twins, Fannie and Freddie, at the center
of this investigation - not on the edge, not out in the future, but
right now," said Rep. Chris Shays, R-Conn. Waxman said Tuesday that he
will hold a hearing on the mortgage giants but would not say whether it
would be before the Nov. 4 elections.

But after facing criticism last week first for not passing and then
for passing a $700 billion financial rescue plan for Wall Street, House
members of both parties seemed eager to put the target on the CEOs'
backs.

AIG executives were scolded for taking excessive risks in expanding
its business selling credit default swaps - insurance-like contracts
meant to protect banks, hedge funds and other investors against default
on assets like subprime mortgages. As the threat of more defaults grew,
rating firms downgraded AIG's credit rating over concerns it could
cover those losses, forcing the Federal Reserve to step in with an $85
billion loan to prevent a financial panic.

"You have cost my constituents and the taxpayers of this country $85
billion and run into the ground one of the most respected insurance
companies in the history of our country," Rep. Carolyn Maloney, D-N.Y.,
told the firm's executives Tuesday.

The two AIG CEOs, Sullivan and Robert Willumstad, blamed the firm's
failure on a loss of investor confidence, the credit crunch and new
accounting rules that forced the firm to write down billions of dollars
in losses on securities that were not yet in default. Sullivan said the
company fell victim to "a global financial tsunami."

Waxman accused the executives of shirking responsibility for their
role in the crisis. He produced documents showing that both AIG's
auditor, PricewaterhouseCoopers, and the federal Office of Thrift
Supervision raised questions earlier this year about the firm's
oversight of the unit that sold the risky credit default swaps.

Longtime CEO unloads

The criticism was echoed by Maurice "Hank" Greenberg, AIG's former
CEO, who ran the company for 38 years until 2005 when Sullivan took
over. Greenberg canceled a scheduled appearance because of illness, but
in prepared testimony he blasted his successors, noting that AIG wrote
as many credit default swaps in the nine months after he left as it had
in the previous seven years, with the majority in the subprime mortgage
market.

"The company we built up over almost four decades has been virtually destroyed," Greenberg wrote.

Lawmakers also condemned Sullivan for urging AIG's board on March 11
to ignore the mounting loss in the unit that sold credit default swaps
when issuing bonuses to 70 executives. Sullivan said he was trying to
retain the company's top talent.

"Trust me, I was focusing more on them than me," he said. At the
same meeting, the board approved a $15 million golden parachute for
Sullivan.

AIG officials on Tuesday said the $440,000 trip to the resort in
Southern California was a reward for the firm's top insurance
salespeople and was scheduled a year ago. But even the firm's former
executives questioned employees for proceeding with the trip in light
of the federal bailout.

"It seems very inappropriate," Willumstad said.

The day's developments: Stocks
extended their free fall Tuesday, plunging in markets around the world
as investors concluded that the financial system crisis and scarcity of
credit could fuel a long and deep recession.

Interest rates: Federal Reserve Chairman Ben
Bernanke, speaking at a meeting of business economists, warned that the
financial crisis could take a heavy toll on the broader economy and
signaled that the nation's central bank is prepared to push down
short-term interest rates.

Further

In the vile wake of Charlottesville - those sweaty young white men, pasty faces contorted, screaming, "Blood and Soil!" "Jews Will Not Replace Us!" "Fuck You Faggots!" - what to say? Just this: This is racism, domestic terrorism, pure hate. This is not who we are, and this is not ok. Most vital, those "whose pigmentation matches theirs" must speak "with unflinching clarity (or) we simply amen it... They need white faces speaking directly into their white faces, loudly on behalf of love."

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